If the price of product Y is $25 and its marginal cost is $18,
A)Y is being produced with the least-cost combination of resources.
B)society will realize a net gain if less of Y is produced.
C)resources are being underallocated to Y.
D)resources are being overallocated to Y.

Question

Quizplus · Accepted Answer

The price of a product reflects the value that consumers place on the last unit of the product they purchase, while the marginal cost reflects the cost of producing one more unit of the product. If the price ($25) is higher than the marginal cost ($18), it indicates that the value consumers place on the product is greater than the cost of producing it, suggesting that more resources could be profitably allocated to its production. Therefore, resources are being underallocated to Y.

If the Price of Product Y Is $25 and Its